Donald Trump has threatened Iran with “obliteration” after its leader Hassan Rouhani suggested the US President suffered from an intellectual disability. 

Mr Trump on Wednsday morning (Australian time) said any attack against the US personnel or assets would be met with “great and overwhelming force”.

“In some areas, overwhelming will mean obliteration,” he tweeted.

The President’s response comes after Mr Rouhani said the White House is “afflicted by a mental disorder” and behaving as “no sane person” in response to new US sanctions that were imposed in retaliation to last week’s downing of an unmanned American drone.

“Their leadership spends all of its money on Terror, and little on anything else. The U.S. has not forgotten Iran’s use of IED’s & EFP’s (bombs), which killed 2000 Americans, and wounded many more,” Mr Trump added.

….Iran’s very ignorant and insulting statement, put out today, only shows that they do not understand reality. Any attack by Iran on anything American will be met with great and overwhelming force. In some areas, overwhelming will mean obliteration. No more John Kerry & Obama!

— Donald J. Trump (@realDonaldTrump) June 25, 2019

Shortly before, Iranian foreign ministry spokesman Abbas Mousavi warned that a US decision to impose “useless” sanctions on the country’s top leadership would permanently close the path to diplomacy between the rival nations.

“Trump’s desperate administration is destroying the established international mechanisms for maintaining world peace and security,” Mr Mousavi tweeted.

Mr Trump signed an executive order on Tuesday, imposing economic sanctions on eight senior military figures in Iran, including Supreme Leader Ayatollah Ali Khamenei.

The sanctions aimed to freeze billions of dollars in Iranian assets according to Treasury Secretary Steven Mnuchin.

In a televised address on Tuesday, Mr Rouhani said the new sanctions against Khamenei would have no practical impact because the top cleric had no assets abroad.

Mr Trump’s hawkish national security adviser, John Bolton, visiting Israel, repeated earlier offers to hold talks, as long as Iran was willing to go beyond the terms of the 2015 deal.

“The president has held the door open to real negotiations to completely and verifiably eliminate Iran’s nuclear weapons program, its pursuit of ballistic missile delivery systems, its support for international terrorism and other malign behaviour worldwide,” Bolton said in Jerusalem. “All that Iran needs to do is to walk through that open door.”

He added: “They’ll either get the point or … we will simply enhance the maximum pressure campaign further.”

Iran says there is no point negotiating with Washington when it has abandoned a deal that was already reached.

Tehran has given European signatories until July 8 to find a way to shield its economy from US sanctions, or else it will enrich uranium to higher levels banned under the deal to help ensure no development of a nuclear weapon results.

But with little sign of European powers meeting Iran’s demand, Deputy Foreign Minister Abbas Araqchi signalled on Tuesday there was no longer any point in Tehran honouring the deal without reciprocation, according to Fars news agency.

French Foreign Minister Jean-Yves Le Drian warned Iran on Tuesday that violating the accord would be a serious mistake and that France, Britain and Germany were making it clear to Tehran that it was not in its interest to do so.

Washington says forcing Iran to the table is the purpose of its sanctions. Tehran has said it is willing to talk if the US lifts the new sanctions first, although Tuesday’s statements appear to toughen that stance.

Mr Trump is leaving a path open to diplomacy with Iran but Tehran would be making a mistake if it interprets his restraint over the downing of a drone as weakness, US disarmament ambassador Robert Wood told a conference in Geneva.

“We will not initiate a conflict against Iran, nor do we intend to deny Iran the right to defend its airspace but if Iran continues to attack us, our response will be decisive,” he said.

Australia’s trade minister Senator Birmingham said Australia wasn’t “at present” part of any coalition being created against Iran.

Despite the rhetoric, the US had only increased its economic sanctions.

“We have serious concerns around Iran’s destabilising behaviour. We urge calm from the Iranians in their response to at what at present are purely economic sanctions,” he told ABC radio on Wednesday.

“But economic sanctions designed to influence the behaviour of a state to prevent them from the escalation of development of nuclear technologies, and military activities and terrorism activities that could well undermine the peace and prosperity of the rest of the world.”

He also said Australia was constantly reviewing the sanctions it had in place on Iran.

-with AAP